EXIM ARTICLES

Trucking on Earth v/s Trucking in Space


Driven by the demands of a global economy, trucking has reinvented itself in the logistics sector and has become an integral part of it. The sheen of the spanking expressways has doubled the efficiency of road transport. Modern trucks are capable of hauling extra loads to boost profits.

Integrated trucking solutions from logistics and specialised transport majors like Gati, TVS Logistics, XPS Global, Safexpress, Om Logistics, etc. have lent trucking a higher profile. By reducing human intervention, technologies have made trucking friendlier.

However, when it comes to accelerating the speed of logistics, road trucking seems to be still at an insulating stage. To meet the screaming need for faster and more efficient transportation, trucking needs to tap and bring to play more avenues in its sector.

The world is making more products right now than at any time in history. Cargo containerships are doubling and even tripling in size to handle the output as demand for next-day air delivery continues to climb and traditional modes are hard-pressed to keep up to it.

Imagine using a space-launch vehicle to heft a payload halfway around the world in less than an hour rather than the same payload stuck in traffic for hours on road as it inches away from the port toward its final destination.

This pioneering new frontier can give a new direction in moving loads of cargo — incredibly fast — and reap unimaginable profits. Some commercial space companies are toying with the idea, and a 1994 aerospace industry report even quantified the critical mass for such a service. A price tag of $ 2,000 per kilogram would generate 100,000 to 300,000 kilograms of business, while a $ 200-per-kilogram price tag would generate between 2 million to 20 million kilograms of business. This kind of business would be steadier and cost-effective.

Although, transportation doesn’t have the same glamorous ring as "spaceflight" but these two endeavours are essentially about the same enterprise: moving product and people. The main difference is that practitioners of conventional transportation have more experience in this field. They work hard to lower operational costs while promoting good customer service. Not to mention deal with all those regulatory and union matters. No matter how much space supporters may admire their groundbreaking, liberal concept, the truth is if spaceports are going to become a successful business, then it must grapple with the mundane demands of earthly living and learn something from their earthbound counterparts.

Though, the idea of transporting cargo through space isn’t that farfetched. On one hand the commercial space endeavours — payloads, space tourism or industrialisation — will have satellites as the menu staple and may move further to explore other markets too. Whereas, on the other hand, even the fastest, most economical technology will find itself stuck on the ground if it doesn’t consider the total commercial picture and will hold no goods in lobbing cargo at supersonic speed if it’s just going to wind up sitting on a freight dock, waiting for a truck to pick it up. Regardless of whether the payload is a feather or a pair of tennis shoes, it has to move through the existing transportation infrastructure on its way to and from the spaceport. It’s a scenario that demonstrates both promise and pitfalls.

The challenges facing space development and commercialisation may not be different from those facing other transportation modes.

So, while the space community is busy looking for ways to lower payload costs and promote their novel plan, its members may want to take some time to consider what will happen once these goals are achieved. Establishing low-cost, reliable access to space is only half of the challenge. The other is ensuring that it fits with the reality of modern life.
 
Supply Chain Management:


Effect of Globalisation


Supply chain management (SCM) involves activity played by various agencies related to manufacturing, supplying, transporting, warehousing, retailing, and finally consumption itself, to meet the requirement of the end user of the product under supply. The process also involves flow of information and money at every stage in all directions.


Global competitiveness today means that the customer is supreme. The customer can source his goods and services from anywhere in the world. With the setting up of the WTO and the systematic bringing down of the barriers set up by different nations by way of Customs tariff as well as non-tariff barriers, we are moving towards an era in which global trade is expected to grow fast.

As customer is supreme, only those enterprises can survive who can provide goods and services to the customer timely, in cost-effective manner and also provide quality that will satisfy and delight him. This means that the enterprise will have to manage its time very well so that it can compete to deliver timely performance. It has to manage its operation in such a way that the production and delivery costs are kept at the minimum to ensure optimum margin. Simultaneously, it has to build a culture of quality and productivity because without which it is not just possible to survive. Finally, to stay always one-step ahead in the competition there has to be an element of creativity.


The above aspects should govern every part of business enterprise, especially production and delivery. Focus should be on SCM so that the delivery chain is automatically taken care of, resulting in customer satisfaction and finally continued customer loyalty and business.

Evolution of SCM

The modern supply chain management has evolved in three different phases:

1. Physical Distribution Management (Logistics);

2. Integrated Logistics Management and;

3. Supply Chain Management, the current phase.

Logistics (Physical Distribution Management): 30 years ago, the function was restricted to trucking, warehousing and delivery. This means managing warehouse, maintain inventory of finished goods and transportation to the final point. Gradually, many companies resumed the role of procurement as well.

Integrated Logistics Management: The process of integration of activities such as procurement, manufacturing, warehousing, distribution, sale, and transportation within an organisation have been felt and gained recognition.

Supply Chain Management


Manufacturing
Operations
Distribution
Marketing
Customers
Supply Chain Management: It extends the scope to link external partners like vendors, distributors, and customers. This system necessitates managing relationship and information and material flow beyond the organisation. The system includes new products development, marketing, operations, distribution, finance, customer care, etc. It is a dynamic function requiring constant flow of information, material and funds and regular interaction at all stages.

Existing supply chain cares for customer satisfaction right from placement of order till accomplishing the order and settlement of bill. Supply chain works as a network ensuring flow of information, products, and funds in either direction, involving one player at a time.

Geographical boundaries are losing their importance as companies consider their network of wide facilities as a single entry. Setting up facilities at a strategic location across the globe, sourcing of raw materials, manufacturing products, and selling in multiple markets imply geographical integration. Geographical integration becomes possible not only because of data processing and communication technologies, but also an excellent worldwide transportation system.

SCM is the strategic management of the supply process, extending the concept of functional integration beyond each of the organisation involved in the business though integration of all cross-functional elements.

Functional activities involve in the supply chain are no longer sequential and compartmentalised. The task of managing supply chain has grown from coordination of physical flows relating to production, distribution and after sales service to research, development and marketing providing opportunity for functional integration and flow management.

A large number of global manufacturers are stretching beyond their corporate boundaries to work in cooperation with other players in the channel in an attempt to optimise the effort, efficiency, and benefits; bringing in sectoral integration.

The development of global economy has provided huge opportunities but also increased risks as supply chains have become more stretched and time critical.

The western world, which has been growth of logistics as a function and supply chain as a process, has the advantage of excellent physical infrastructure and more than excellent information technology available to them, which are being used, monitored and continuously improved for managing the supply chain.

As India begins to consolidate its retail base it will get much more sophisticated in its logistics needs too. Holding surplus inventory and wastage of time and resources for transportation will be a costly error. Proper management of human resources will be an important factor for efficient management of supply chain. A huge network of information and communication system will be required to manage this high speed and accurate supply chain. A new warehouse management system, different from the present one, will have to place to operate a mass retail supply chain as the success will depend on the execution of efficiency and responsiveness of warehouse.

With the entry of world retail leaders into Indian retail sector and major Indian entrepreneurs hurrying to establish, the business is expected to boom in India. This will open abundant opportunities for logistics service providers.

Infrastructure in India is expected to grow—matching to the requirement—as road, rail, port, and airport sectors are planning huge investments to face the challenge. These infrastructure sectors would be completing their first phase of modernisation and setting up plans by 2012. Immediate plans are:

Highways: 40,000 km to be developed by 2012 investing Rs 2,22,000 crore. For 19,600 km public-private partnership (PPP) programmes are approved. Model Concession Agreement (MCA) for PPP and financing plan are also approved.

Airports: Two greenfield airports are being commissioned in early 2008. Two gateway airports have been taken up for modernisation through privatisation. Two more gateway airports proposed for modernisation. 35 other airports have been identified and being taken up for modernisation. Likely investment on these projects will be of Rs 40,000 crore.

Ports: 54 new berths, with 640-million tonne capacity, will be created by 2012 through PPP. Rail/road connectivity to ports, capacity enhancement, and deepening of draught has also been planned.

Infrastructure Plans

Highways
Ports



Airports
Railways

Railways: Dedicated freight corridor, investing Rs 22,000 crore, planned. Private sector entry into container train segment allowed. PPP has envisaged into new routes, railway stations, logistics parks, cargo aggregation and warehouses.

If everything goes as planned, India will have world-class infrastructure facilities in transportation sector and undoubtedly, other sectors will follow.

SCM is an integrated function and requires modern approach. In the present global competitive environment proper business strategy, perfect integration and SCM techniques are essential to achieve business goals and success
 
SPOT LIGHT

" We have contributed in a very positive and efficient way to help make globalisation happen"


Mr Gianluigi Aponte, Group President & Founder, Mediterranean Shipping Company

The global empire of Mediterranean Shipping Company (MSC), the world’s second largest shipping line, is the direct result of the vision and dedication of one man, Group President and Founder, Mr Gianluigi Aponte.

Legendry for his hard work, Mr Aponte runs group operations from corporate headquarters in Geneva, preferring others to represent him abroad.

"The most important challenge is to be profitable and professional in what we do," he tells on one of his rare trips abroad; to the christening of his group’s latest cruise ship, the MSC Orchestra. "We have to satisfy both our container clients and cruise passengers."

Customer satisfaction has certainly been key to the phenomenal rise of MSC, which started with just one second-hand vessel in 1969.

He impressed colleagues and family members with his leadership qualities and great ability to manoeuvre ships in restricted harbours.

Cruising to great heights

MSC has quietly but surely established itself as a major force in passenger shipping as well as container shipping.

Besides taking over Naples-based hydrofoil and fast ferry company SNAV, MSC Cruises has gradually grown to become the world’s 4th largest cruise company. Next year, it will receive the first of two 133,500- gross tonne vessels, the largest passenger ships ever built for an European shipowner.

In 2004, the man behind this success story, Mr Aponte received an Honorary Degree in Maritime Economics from the University of Naples, coinciding with the group’s 25th anniversary — a fitting tribute to one of the region’s most famous seafaring sons.

Mr Aponte set up MSC in 1969 when a client of the bank, where he worked previously, expressed interest in starting a shipping partnership with Mr Aponte. MSC was established in Brussels. Its first acquisition was a 2,900-DWT German-owned ship, which was joined two years later by an ex-Hapag-Lloyd 4,246-DWT vessel, renamed Rafaela.

Rates were pitched low, to attract business on new routes, while meticulous plans for stowage and positioning of empty boxes optimised profitability.

By 1976, the company had moved to Geneva and was operating three lines from the West Mediterranean to the Red Sea, East Africa and South Africa.

Today, MSC operates some 340 container vessels on a network of over 200 routes, not to mention the world’s fastest growing cruise line, a fleet of ferries, ship repair yards and ship agencies. All this has been achieved while retaining the company’s 100 per cent private ownership structure.

MSC’s corporate culture has also played a large part in the group’s success. Based on the seafaring tradition of Mr Aponte’s native Sorrento region in southern Italy (some 9,000 staff still come from that region, which is to the south of Naples), the group goes to great lengths to foster a true ‘family spirit’ among employees, as evidenced by the ‘Mondalito’ or ‘little soccer World Cup’ that it organises every two years.

"It’s very important to bring people together and unite them," says Mr Aponte. "The Mondalito has generated tremendous corporate spirit", which was the aim.

Indeed, globalisation is a theme that is clearly very dear to Mr Aponte’s heart.

"I am very proud, together with all my colleagues in the global container business, of having contributed in a very positive and efficient way to help make globalisation happen," he says. "We were the one’s who foresaw globalisation and invested heavily. It’s a matter of being involved in the work you do every day. Our professionalism helped us see that globalisation was coming."


"This has not been the case for all the governments in the world," he continues, "and when it came they were totally unprepared with their ports and infrastructure. Globalisation brings wealth but it also brings problems. The ports were not geared up and we had a lot of problems and still do today with a lot of ports congested. And obviously turnarounds at congested ports take longer, meaning more capacity is required."

It seems Mr Aponte believes that Asian ports and terminal groups have invested in facilities with sufficient expansion potential.

Does this explain why MSC was prepared to enter into a joint venture with PSA to operate container berths at Pasir Panjang Terminal?

"Our strategy is to get involved in ports only when these have a strategic aspect for our company," says Mr Aponte.

"PSA Singapore is one of the best ports in the world in terms of productivity and efficiency. Results are in line with what we expected. We are happy with this."

With a massive order book of new ships, many of more than 10,000 TEUs capacities, Mr Aponte clearly feels that the future is bright for the container business.
 
Back
Top